Gold prices remained steady in Dubai at the start of the week after a strong performance in the previous week. In the UAE, the price for 24K gold was trading at Dh292 per gram, while 22K, 21K, and 18K gold were priced at Dh270.5, Dh261.75, and Dh224.25 per gram, respectively.
Global Market Trends
On the global front, gold saw a slight increase of 0.10%, reaching $2,411.02 per ounce. This rise follows a rally of over 2% last week, driven by soft inflation data from the US, which boosted expectations for a potential interest rate cut in September, along with dovish remarks from US Federal Reserve Chairman Jerome Powell.
Impact of US Inflation Data
The Consumer Price Index (CPI) inflation in the US fell from 3.3% to 3% in June, which was slightly below expectations of a decline to 3.1%. Samer Hasn, a research analyst at XS.com, noted that gold’s gains are supported by growing optimism about a possible interest rate cut in the US following this faster-than-expected slowdown in inflation.
Geopolitical Factors Supporting Gold
Additionally, escalating military tensions in the Middle East and Ukraine have contributed to maintaining gold’s upward momentum. Analysts anticipate that gold prices will remain elevated in the coming weeks due to expectations of US rate cuts and ongoing geopolitical uncertainties.
Interest Rate Cut Expectations
Hasn stated, “This decline in US inflation has led to heightened hopes that the Federal Reserve will cut interest rates in September. The probability of a 25 basis point rate cut has reached over 76% according to the CME FedWatch Tool.”
Broader Economic Concerns
Mazen Salhab, chief market strategist for Mena at BDSwiss, added that political uncertainty in the US and Europe, coupled with geopolitical risks and fears of a global economic slowdown, further bolster the bullish outlook for gold. The beginning of an easing cycle by central banks and their continuous demand for gold are also expected to support the precious metal’s prices moving forward.
